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Home >Markets >Stock Markets >This chemical company's shares up 150% in 2020. Anand Rathi raises target

Shares of Navin Fluorine, a manufacturer of speciality fluorochemicals, were in focus today after the company recently announced plans for setting up a new multi-purpose plant. Shares rose 1.5% to 2600, extending Thursday's 2.5% gain.

Navin Fluorine on Thursday announced that its board has approved capital expenditure (to be undertaken at Dahej through wholly owned subsidiary, Navin Fluorine Advanced Sciences Limited) of 195 crore for the purpose of setting-up of multi-purpose plant.

After the announcement, domestic brokerage Anand Rathi has upgraded its rating on Navin Fluorine to a "buy" on the stock with a higher target price of 3,000, from 2,500 earlier.

"To strengthen its specialty chemicals division and for growth, Navin Fluorine announced Rs195 crore capex in agro and pharma, expected to be funded through internal accruals and debt. The multi-purpose plant at its wholly-owned subsidiary, Navin Fluorine Advanced Sciences, at Dahej, Gujarat, is expected to be commissioned in H1 FY23. The expansion would help launch products of complex fluorinated chemistry and strengthening customer relations. We upgrade our rating to Buy with a higher target of 3,000, valuing the stock at 34 times FY23 estimated EPS," the brokerage said.

Navin Fluorine operates one of the largest integrated fluorochemicals complexes in India with manufacturing locations at Surat and Dahej and Dewas, according to its website. It has four main strategic business units: Refrigeration gases, inorganic fluorides, speciality fluorides and contract research and manufacturing services.

"With this multi-purpose plant, the company will have capacity to manufacture five products, specifically in agro. Of five products, three will be developed in-house and two with clients (according to their specifications). Navin has another seven products in the pipeline catering to pharma and agro. Management said the EBITDA margin would be higher than at present and the RoCE would be in a similar range," Anand Rathi said.

"Management said construction is expected to be complete by Apr’22 and take two months to stabilise. Hence, commercial production would start from June 22. We have raised our FY23e revenue and PAT 7% and 8% respectively, considering the plant operating for about nine months in FY23," it added.

Navin Fluorine shares have surged 157% so far this year, hitting a high of 2,758 last month.


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